Occasionally, a decedent's Will is void or out-of-date because it was not amended to take into account their evolving circumstances at the time of death. Alternatively, there might not be a will at all, in which case the Intestacy Rules would not have allowed the deceased person's assets to be distributed as they would have liked.
A beneficiary may elect not to receive everything to which they are entitled in order to transfer some or all of what they are entitled to others they consider are more deserving or to make sure that everything is more in accordance with the wishes of the deceased individual.
There may be benefits for Inheritance Tax and Capital Gains Tax associated with making different modifications to the circumstances emanating from the Will or intestacy.
When is the need for a Deed of Variation necessary?
Any adult with mental capacity is eligible to inherit from a deceased person's estate and can give their inheritance to whoever they choose. By filing what is known as a deed of variation will, the law allows the gift to be viewed as though it was made by the deceased individual straight from his estate slightly than the planned recipient's.
To qualify for the advantageous tax status that the modified inheritance may bring about, a Deed of Variation is needed. This allows the IHT and CGT positions to be "read back" until the point of death as long as certain protocols are followed. If someone is affected by the Forfeiture Rules, they are not eligible to choose an alternate receiver, and they cannot inherit. The inheritance reverts to the estate and is distributed in line with the terms of the will or testament, just as if the intended beneficiary had died before the deceased individual.
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